In buying and
selling , of course you want the price in accordance with the goods bought and
sold . In order to achieve a fair transaction , it is important to ensure that
the prevailing price is the right price corresponding goods bought and sold
The same logic applies in this
type of financial transaction . Accuracy rates imposed on particular or pricing
mechanism [ pricing mechanism) is generally a necessary condition to ensure the
achievement of a fair transaction . However, in financial markets , from the
first until modern times , people generally assume that the interest rate is
the price of money (the price of money) . Is it true that this assumption ?
Will briefly be explained that
the interest rate was not the price of money, but only time price { price of
time) . Consequently , the interest rate would not be able to play a role in
the proper pricing mechanism and fair in various forms of financial transaction
, in this case the borrowing of funds . Why?
You may put forward the simple
logic of the existence of inflation . However , here will be shown that the
application of the interest rate as the price of money can not reflect the real
value of money , it's up to whether there is inflation or not . Even if you
can, at most, only a representation of the interest rate shadow price ( shadow
price) of money or funds lent.
To understand this, you can
re-grasp the concept of time value of money as has been discussed in the
previous issue Not Tafsir. Briefly, the concept of time value of money itself
is actually not in itself indicate that the interest rate reflects the actual
cost or the price of money, interest rate only time prices based opportunity
(opportunity) owned.
Enough with simple math to prove
it. Equation value for money at this time (present value or value kiwari)
clearly states that the value of money or investing in the future (future
value) does not grow based on the value kiwarinya, because kiwari just a
constant value. For those of you who like math, a decrease in the equation will
show that the value of future value will change based on the time and the
interest rate. In other words, the future value of an investment will change
over time because it is a function of time itself. It is clear that the
interest rate of the time it turns out is the price of money.
In practical language, let's say
you do a transaction on a loan through conventional loans. In the contract, it
appears that you are obliged to return the principal installments plus
borrowing costs are valued based on the time of borrowing. The higher the
interest rate, the more expensive the price of his time.
For more convincing, you try to
create simple production function where the money we regard as one of the
inputs. Replace input of capital goods with money (loans) so that the input
function is the production of money and time. In a production function like
this, money can not play a role in the productive process. The reason is
because the money is not necessarily can be transformed into a productive
input.
The implication is that
increasing time would not necessarily going to increase production. In other
words, the increase in production due to the increase of input time by default
is zero until at any time as long as there is no transformation of money, or
loans become productive input in the time period. Therefore, the assumption
that time is one of the inputs is unfounded because it did not affect the level
of production.
Similarly, the loan money
itself. The growth of the money invested will not affect the output during the
loan was not spent on productive things. Unlike the case for example if you buy
with this money machine. When the engine is started, the output will increase.
These facts show that the money
and will Watu productive only if the loan to buy capital goods, then used
productivity. It should be noted that the term "productivity by time"
does not mean that production is determined olehwaktu, but merely hinted that
output will increase over time if the use of such capital goods add to the
output. It can be said that the output and time Meru feed two separate things
altogether. Time only serves as a description of the evolution of output.
And the above description is
quite clear that the interest rate is not the price of money. Borrowing money
would not necessarily add to the output for the money not spent on productive
capital goods. It is enough to justify the application of interest rate fallacy
as "refund fee" that makes the value of the loan continues ballooned
over time.
Another implication is that in
financial transactions , pricing mechanism needs to be done through price terms
other than interest rates. Another form of transaction in which the pricing
mechanism is not at all associated with the time -for example, setting the
selling price is based on a margin over sales contract or contracts for capital
goods would result , more equitable and can even be scientifically justified .
From the perspective of this
pricing mechanism , probably quite obvious presumably why a verse forbids usury
and as pembandmgnya is a contract of sale is lawful . However, because this
section is not commentary , of the jurists and the commentators - who is more
competent to explain .
